Date: May 7, 2004
For more information contact: Eileen Mallow, Assistant Deputy Commissioner, (608) 266-7843 or eileen.mallow@wisconsin.gov

Madison, WI--Graduation carries with it a new set of responsibilities for those entering the "real world" for the first time, not the least of which is the need for health insurance. Unfortunately, in the excitement of graduation, students all too often overlook the fact that they lose their parent's health insurance coverage when they leave school. As a result, the Office of the Commissioner of Insurance (OCI) is encouraging soon-to-be graduates to do some planning now to make sure they have health insurance upon graduation.

"Health insurance is a fundamental building block in the path toward a sound financial future," said Jorge Gomez, Commissioner of Insurance. "Health care in this country can be prohibitively expensive if you don't have insurance, and a basic health plan helps make sure that medical necessities do not cause financial crises."

Graduates are often unfamiliar with health insurance because students in high school and college typically receive coverage as a "dependent" under their parent or guardian's health plan. However, after graduation, most health insurers no longer view former students as dependents and they are dropped from the policy. High schoolers commonly receive dependent status until the age of 19 unless they continue on in school and are classified as a full-time student. College students, meeting the full-time student requirement, are generally viewed as dependents until graduation or age 24.

According to OCI, far too many graduates fail to understand why they need health insurance because they view themselves as "healthy," and insurance plans as an unnecessary cost. Commissioner Gomez says this mindset is dangerous and leaves too much to chance.

"At no time in our lives--even when we're young--are we immune to accident and injury. Things like auto accidents, sports-related injuries and even serious illness can happen at any age. The last thing you want as you are starting out in life is to add the burden of a huge hospital bill on top of your student loans because you got injured and didn't have health insurance. Sadly, that is the risk too many graduates take," Gomez said.

A common period when graduates go without health insurance is between the time they leave school and begin their first job. During this interval, graduates have two primary options for acquiring health insurance: continuation of benefits from their parent's health insurer and individual short-term health insurance policies.

Group Continuation and Conversion Rights

Graduates previously covered under a parent's group health plan may have the right to continue that group coverage for a period of time after they are no longer eligible dependents by paying for the full cost of the coverage themselves. Continuation coverage typically ends when the graduate finds a job and becomes covered under that employer's group health plan.

Graduates may also be eligible to purchase an individual conversion policy when they are terminated from a parent's group health plan. An individual conversion policy can usually be continued as long as the graduate continues to pay the premiums.

Typically graduates have a limited period of time to elect continuation or conversion coverage. OCI recommends graduates contact their parent's employer before or as soon after graduation as possible for further information concerning their continuation and conversion rights.

Short-Term Insurance

Another option students have is to find a short-term health insurance plan. Commonly, short-term plans require enrollees to pay a deductible, after which the insurance pays for a set percentage of the medical expenses. Short-term plans are offered by a variety of insurers and alumni associations. The policies vary in the length of their term, so graduates should be able to find a plan that closely matches the length of time they expect to be between graduation and work.

"A key difference between continuation and short-term plans is that continuation covers preexisting medical conditions whereas short-term plans do not. With a short-term plan, you are essentially buying accident insurance to make sure you have some protection against unforeseen injuries and mishaps," said Gomez.

As with all insurance decisions, OCI encourages consumers to shop around to find the policy that best fits their needs at a price they can afford.

More information about continuation and conversion rights is available in OCI's Fact Sheet on Continuation and Conversion Rights in Health Insurance Policies. The publication is available for download from http://oci.wi.gov, or may be requested by contacting OCI toll-free at 1-800-236-8517, by writing OCI, P.O. Box 7873, Madison, WI 53707-7873, or by e-mailing ociinformation@wisconsin.gov.

Created by the legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.